City council's new tax revives decades old legal battle with Cullman Electric Cooperative
CULLMAN , Ala. (WBMA) — Cullman Electric Cooperative filed a complaint Friday in U.S. Federal Court against an ordinance passed earlier this month by the Cullman City Council taxing the co-op for customers within city limits.
The 3% tax passed by the council would impact 1,200 customers located in the limits of the City of Cullman. The majority are residential properties but Cullman Electric says the tax would also impact it's five biggest commercial customers including Cullman Regional Medical Center and many of the region's automotive supply plants.
"What would likely happen is that tax would be passed on to the end user and so that was really the driving force behind us choosing to go ahead and file in federal court to get this injunction because we felt it was in the best interest of our members," said co-op spokesman Brian Lacy.
Lacy estimated the tax would require the co-op to charge a combined total of an additional $500,000 each year in power bills from some of the region's largest employers.
READ: Driving academy offering sponsorships for students to get CDL licenses
READ: Supply shortage impacting medical equipment
In 1991, the U.S. District Court for the Northern District of Alabama ruled the City of Cullman could not tax Cullman Electric because it was a franchise of the Tennessee Valley Authority, which as a federally-owned utility cannot legally be taxed.
Five years later the Alabama Supreme Court ruled municipalities could charge electric cooperatives operating within city limits. Lacy acknowledged the city does pay a similar tax to municipalities in other parts of the state.
"We completely understand that, but in dealing with the City of Cullman, we have this very specific federal ruling that we think takes precedent."
The City of Cullman declined to speak on the record citing the pending legal proceedings.
Cullman Electric Cooperative distributes power to over 36,000 customers in Cullman. Winston, Morgan and Lawrence counties. The ordinance is set to take affect on January 1, 2022 but Cullman Electric also filed a motion seeking a permanent injunction. A judge has yet to rule on the request.
